IRS Money Laundering Probe Led to Spitzer Revelation

The federal investigation into a high-end prostitution ring linked to Gov. Eliot Spitzer apparently began last year as a financial probe by the Internal Revenue Service.

The investigation into the Emperors Club VIP gathered more than 5,000 telephone calls and text messages, and more than 6,000 e-mails, along with bank records, travel and hotel records and surveillance.

But it was unclear whether Spitzer was a target from the start or whether agents came across his name by accident while amassing evidence.

Conversations were recorded about someone identified as "Client 9," including that a prostitute identified as "Kristen" should take a train from New York to Washington for a tryst on the night of Feb. 13, according to an affidavit.

A law enforcement source in Washington who spoke on condition of anonymity told The Associated Press that "Client 9" was Spitzer and that he met with "Kristen" in a Washington hotel room just two hours before Valentine's Day.

Wiretaps enabled government agents to listen as the woman later told a booking agent for the ring that she had secured $4,300 in cash from her client and that she liked him. Authorities also had statements from a confidential source and an undercover officer.

The prostitution ring first came to light last week when four people with charged with running it.

It was not immediately clear whether Spitzer could face charges. Federal prosecutors have brought charges against several prostitution rings over the past two decades, but have generally not prosecuted customers.

The public-corruption unit of the U.S. attorney's office got involved after the IRS looked into a complaint of a potential violation of the Bank Secrecy Act, the government's main tool against money laundering.

Financial institutions are required to have anti-money laundering programs, which help the government catch terrorist financiers, drug lords and other criminals. Financial companies also must report suspicious financial transactions to the government.

Investigators say the Emperors Club, which is based in Brooklyn, made more than $1 million for its operators by selling the services of women whose bodies were displayed, their faces concealed, on a Web site.

The prostitutes were advertised as costing from $1,000 to $5,500 an hour.

Last Thursday, four people were arrested in the probe and charged with conspiracy to violate federal prostitution laws: Mark Brener, 62, and Cecil Suwal, 23, who live together in Cliffside Park, N.J.; Temeka Rachelle Lewis, 32, of Brooklyn; and Tanya Hollander, 36, of Rhinebeck, N.Y.

Brener and Suwal also were charged with conspiracy to launder more than $1 million in illicit proceeds. Lewis and Hollander were accused of arranging meetings between prostitutes and clients.

Assistant U.S. Attorney Dan Stein said he believed the arrests shut down the ring.

The business promised clients they could pay with a wire transfer that would show up on records as QAT Consulting to make it appear to be a business transaction.